Prospectus Filed Pursuant to Rule 424(b)(5) (424b5)

Date : 05/02/2019 @ 10:17AM
Source : Edgar (US Regulatory)
Stock : Imageware Systems, Inc. (QB) (IWSY)
Quote : 0.36  0.0015 (0.42%) @ 9:31PM

Prospectus Filed Pursuant to Rule 424(b)(5) (424b5)

 
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-225935
 
PROSPECTUS SUPPLEMENT
(To Prospectus dated July 10, 2018)
 
 
 
 
 
5,954,545 Shares
We are offering 5,954,545 shares of our common stock, $0.01 par value per share, at a public offering price of $ 1.10 per share pursuant to this prospectus supplement and the accompanying prospectus.
 
Our common stock is currently listed for quotation on the OTCQB Marketplace under the symbol “IWSY.” The last reported sales price of our common stock on April 29, 2019 was $1.35 per share.
  
Investing in our common stock involves a high degree of risk. Please read the information contained in and incorporated by reference under the heading “ Risk Factors ” beginning on page S-5 of this prospectus supplement and beginning on page 5 of the accompanying prospectus, the section captioned “ Item 1A—Risk Factors ” in our most recently filed Annual Report on Form 10-K for the year ended December 31, 2018, which is incorporated by reference into this prospectus supplement, and under similar headings in the other documents that are filed after the date hereof and incorporated by reference into this prospectus supplement.
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
 
 
________________________________________________________________
 
 
Prospectus Supplement dated April 29, 2019
 
 
 
 
IMAGEWARE SYS T EMS, INC.
 
TAB LE OF CONTENTS
 
 
 
 
 
 
PAGE
 
 
 
PROSPECTUS SUPPLEMENT
 
 
 
 
S-1
 
S-2
 
S-4
 
S-5
 
S-6
 
S-7
 
S-8
 
S-9
 
S-10
 
S-11
 
S-12
 
S-12
 
S-12
 
S-12
 
 
 
 
 
 
PROSPECTUS
 
 
 
 
1
 
2
 
5
 
6
 
7
 
8
 
13
 
15
 
16
 
16
 
16
 
16
 
 
-i-
 
 
ABOUT THI S PR O SPECTUS SUPPLEMENT
 
This document is in two parts, this prospectus supplement and the accompanying prospectus, both of which are part of a registration statement on Form S-3 that we filed with the Securities and Exchange Commission (the “ SEC ”) using a “shelf” registration process.
 
The two parts of this document include: (i) this prospectus supplement, which describes the specific details regarding this offering of shares of our common stock; and (ii) the accompanying base prospectus, which provides a general description of the securities we may offer, some of which may not apply to this offering. Generally, when we refer to this “prospectus,” we are referring to both documents combined. If information in this prospectus supplement is inconsistent with the accompanying base prospectus, you should rely on this prospectus supplement. You should read this prospectus supplement together with the additional information described below under the heading “ Where You Can Find More Information ” and “ Incorporation of Certain Information by Reference .”
 
We have not authorized any other person to provide you with any information that is different. We are offering to sell, and seeking offers to buy, our securities only in jurisdictions where offers and sales are permitted. The distribution of this prospectus supplement and the accompanying prospectus and the offering of the securities in certain jurisdictions may be restricted by law. Persons outside the United States who come into possession of this prospectus supplement and/or the accompanying prospectus must inform themselves about, and observe any restrictions relating to, the offering of the securities and the distribution of this prospectus supplement and/or the accompanying prospectus outside the United States. This prospectus supplement and the accompanying prospectus do not constitute, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy, any securities offered by this prospectus supplement and the accompanying prospectus by any person in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation.
 
We further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any document that is incorporated by reference in the accompanying prospectus were made solely for the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties or covenants were accurate only as of the date when made. Accordingly, such representations, warranties and covenants should not be relied on as accurately representing the current state of our affairs.
 
Unless the context otherwise requires, we use the terms “ ImageWare Systems ,” the “ Company ,” “ we ,” “ us ” and “ our ” in this prospectus supplement and accompanying prospectus to refer to ImageWare Systems, Inc. and its subsidiaries on a consolidated basis.
 
 
 
S-1
 
 
PRO S PEC TUS SUPPLEMENT SUMMARY
 
This summary highlights selected information contained elsewhere in this prospectus supplement and the accompanying prospectus, and in the documents we incorporate by reference. This summary does not contain all of the information you should consider before investing in our securities. You should read this entire prospectus supplement and the accompanying prospectus carefully, especially the risks of investing in our securities discussed under “Risk Factors” beginning on page S-5 of this prospectus supplement and under similar headings in our Annual Report on Form 10-K for the year ended December 31, 2018, which report is incorporated by reference in this prospectus supplement, along with our consolidated financial statements and notes to the consolidated financial statements and the other information incorporated by reference in this prospectus supplement and the accompanying prospectus, before making an investment decision.
 
Company Overview
 
We are a pioneer and leader in the emerging market for biometrically enabled software-based identity management solutions. Using those human characteristics that are unique to us all, we create software that provides a highly reliable indication of a person’s identity. Our “flagship” product is our patented IWS Biometric Engine®. Scalable for small city business or worldwide deployment, our IWS Biometric Engine is a multi-biometric software platform that is hardware and algorithm independent, enabling the enrollment and management of unlimited population sizes. It allows a user to utilize one or more biometrics on a seamlessly integrated platform. Our products are used to manage and issue secure credentials, including national IDs, passports, driver licenses and access control credentials. Our products also provide law enforcement with integrated mug shot, LiveScan fingerprint and investigative capabilities. We also provide comprehensive authentication security software using biometrics to secure physical and logical access to facilities or computer networks or Internet sites. Biometric technology is now an integral part of all markets we address and all of our products are integrated into the IWS Biometric Engine. 
  
Our biometric technology is a core software component of an organization’s security infrastructure and includes a multi-biometric identity management solution for enrolling, managing, identifying and verifying the identities of people by the physical characteristics of the human body. We develop, sell and support various identity management capabilities within government (federal, state and local), law enforcement, commercial enterprises, and transportation and aviation markets for identification and verification purposes. Our IWS Biometric Engine is a patented biometric identity management software platform for multi-biometric enrollment, management and authentication, managing population databases of virtually unlimited sizes. It is hardware agnostic and can utilize different types of biometric algorithms. It allows different types of biometrics to be operated at the same time on a seamlessly integrated platform. It is also offered as an SDK based search engine, enabling developers and system integrators to implement a biometric solution or integrate biometric capabilities into existing applications without having to derive biometric functionality from pre-existing applications. The IWS Biometric Engine combined with our secure credential platform, IWS EPI Builder, provides a comprehensive, integrated biometric and secure credential solution that can be leveraged for high-end applications such as passports, driver licenses, national IDs, and other secure documents.
  
Our law enforcement solutions enable agencies to quickly capture, archive, search, retrieve, and share digital images, fingerprints and other biometrics as well as criminal history records on a stand-alone, networked, wireless or web-based platform. We develop, sell and support a suite of modular software products used by law enforcement and public safety agencies to create and manage criminal history records and to investigate crime. Our IWS Law Enforcement solution consists of five software modules: Capture and Investigative modules, which provide a criminal booking system with related databases as well as the ability to create and print mug photo/SMT image lineups and electronic mugbooks; a Facial Recognition module, which uses biometric facial recognition to identify suspects; a Web module, which provides access to centrally stored records over the Internet in a connected or wireless fashion; and a LiveScan module, which incorporates LiveScan capabilities into IWS Law Enforcement providing integrated fingerprint and palm print biometric management for civil and law enforcement use. The IWS Biometric Engine is also available to our law enforcement clients and allows them to capture and search using other biometrics such as iris or DNA.
 
Our secure credential solutions empower customers to create secure and smart digital identification documents with complete ID systems. We develop, sell and support software and design systems which utilize digital imaging and biometrics in the production of photo identification cards, credentials and identification systems. Our products in this market consist of IWS EPI Suite and IWS EPI Builder. These products allow for the production of digital identification cards and related databases and records and can be used by, among others, schools, airports, hospitals, corporations or governments. We have added the ability to incorporate multiple biometrics into the ID systems with the integration of IWS Biometric Engine to our secure credential product line.
 
Our enterprise authentication software includes the IWS Desktop Security product, which is a comprehensive authentication management infrastructure solution providing added layers of security to workstations, networks and systems through advanced encryption and authentication technologies. IWS Desktop Security is optimized to enhance network security and usability, and uses multi-factor authentication methods to protect access, verify identity and help secure the computing environment without sacrificing ease-of-use features such as quick login. Additionally, IWS Desktop Security provides an easy integration with various smart card-based credentials including the Common Access Card (“ CAC ”), Homeland Security Presidential Directive 12 (“ HSPD-12 ”), Personal Identity Verification (“ PIV ”) credential, and Transportation Worker Identification Credential (“ TWIC ”) with an organization’s access control process. IWS Desktop Security provides the crucial end-point component of a Logical Access Control System (“ LACS ”), and when combined with a Physical Access Control System (“ PACS ”), organizations benefit from a complete door to desktop access control and security model.
 
 
 
S-2
 
 
Company Information
 
ImageWare Systems, Inc., a Delaware corporation, was founded in February 1987. Our principal executive offices are located at 13500 Evening Creek Drive N, Suite 550, San Diego, California 92128, and our telephone number is (858) 673-8600. Our website address is  www.iwsinc.com . The information contained on our website is not part of this prospectus supplement or the accompanying prospectus. We have included our website address as a factual reference and do not intend it to be an active link to our website.
 
Risks Associated with Our Business
 
Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the section titled “ Item 1A—Risk Factors ” sections in our Annual Report on Form 10-K for the year ended December 31, 2018, which is incorporated by reference in this prospectus supplement. These risks include the following:
 
We have incurred significant operating losses since inception and cannot assure you that we will ever achieve or sustain profitability;
 
We depend upon a small number of large system sales and we may fail to achieve one or more large system sales in the future;
 
Our lengthy sales cycle may cause us to expend significant resources for as long as one year in anticipation of a sale to certain customers, yet we still may fail to complete the sale;
 
A significant number of our customers and potential customers are government agencies that are subject to unique political and budgetary constraints and have special contracting requirements, which may affect our ability to obtain new and retain current government customers;
 
We are dependent upon third parties for the successful integration of our products, and/or the launch of our products. Any delay in the integration of our products, or the launch of third party products may materially affect our results from operations and financial condition;
 
If the patents we own or license, or our other intellectual property rights, do not adequately protect our products and technologies, we may lose market share to our competitors and our business, financial condition and results of operations would be adversely affected; and
 
We will need to raise substantial additional funds in the future, and these funds may not be available on acceptable terms or at all. A failure to obtain this necessary capital when needed could force us to delay, limit, scale back or cease some or all operations.
 
 
S-3
 
 
T HE O FFERING
 
Issuer
 
ImageWare Systems, Inc.
 
 
 
Securities offered by us in this offering
 
5,954,545 shares of common stock.
 
 
 
Public offering price
 
$ 1.10 per share
 
 
 
Common stock outstanding immediately before this offering
 
99,260,214 shares
 
 
 
Common stock outstanding immediately after this offering
 
105,214,759 shares (assuming the sale of all shares covered by this prospectus supplement).
 
 
 
Manner of offering
 
We are offering the shares of our common stock directly to certain institutional investors with the assistance of a financial advisor, Needham & Company. See “ Plan of Distribution ” on page S-11.
 
 
 
Use of proceeds
 
We currently intend to use the proceeds from this offering for research and development, working capital needs, capital expenditures and other general corporate purposes. See “ Use of Proceeds ” on page S-7.
 
 
 
Risk factors
 
Investing in our securities involves significant risks. Please read the information contained in or incorporated by reference under the heading “ Risk Factors ” beginning on page S-5 of this prospectus supplement, and under similar headings in other documents filed after the date hereof and incorporated by reference into this prospectus supplement and the accompanying prospectus.
 
 
 
OTCQB Marketplace symbol
 
IWSY
 
The number of shares of common stock to be outstanding immediately after this offering is based on 99,260,214 shares of our common stock outstanding as of April 29 , 2019. Unless we specifically state otherwise, the share information in this prospectus supplement excludes:

7,213,759 shares of common stock issuable upon the exercise of stock options at a weighted average exercise price of $1.35 per share;
 
1,813,856 shares of common stock issuable upon exercise of outstanding warrants, with a weighted average exercise price of $0.19 per share; and
 
32,839,731 shares of common stock issuable upon conversion of the Company’s Series A Convertible Redeemable Preferred Stock,
 
47,286 shares of common stock issuable upon conversion of the Company’s Series B Convertible Redeemable Preferred Stock,
 
10,079,452 shares of common stock issuable upon conversion of the Company’s Series C Convertible Redeemable Preferred Stock,
 
457,332 shares of common stock reserved for future issuance under the Company’s 1999 Stock Option Plan .
 
 
S-4
 
 
RISK FAC T ORS
 
An investment in our securities involves a high degree of risk. You should consider the risks, uncertainties and assumptions discussed below, together with all of the other information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the Securities and Exchange Commission on March 28, 2019. It is not possible to predict or identify all such risks. Consequently, we could also be affected by additional factors that are not presently known to us or that we currently consider to be immaterial to our operations.   The occurrence of any of these known or unknown risks might cause you to lose all or part of your investment in the offered securities.
 
Risks Related to this Offering
 
We may not raise enough capital from the sale of our securities to address our short-term cash flow needs or adequately fund and execute our developing growth strategy.
 
We may be unable to successfully complete all of the anticipated uses of the net proceeds of this offering. The financial notes to our Annual Report on Form 10-K for the year ended December 31, 2018, contain an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. Even considering this offering, we might not be able to address our short-term cash flow needs and continue operations. Furthermore, we might be unable to execute our developing growth strategy as planned and our prospects, business, financial condition, and results of operations could be adversely affected, all of which would have a negative impact the return on your investment in our common stock.
 
Management will have broad discretion as to the use of the proceeds from this offering and may not use the proceeds effectively.
 
Our management will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that may not improve our results of operations or enhance the value of our securities. Our failure to apply these funds effectively could have a material adverse effect on our business and cause the price of our common stock to decline.
 
We may be required to raise additional financing by issuing new securities with terms or rights superior to those of our existing shareholders, or at a price per share that is less than the price per share paid by investors in this offering, which could adversely affect the market price of shares of our common stock and our business.
 
We will require additional financing to fund future operations, including our research, development, sales and marketing activities. We may not be able to obtain financing on favorable terms, if at all. If we raise additional funds by issuing equity securities, we may sell shares or other securities in any other offering at a price per share that is less than the price per share paid by investors in this offering. Additionally, if we raise additional funds by issuing equity securities, the percentage ownership of our current shareholders will be reduced, and, if the equity securities issued are preferred shares, the holders of the new preferred shares may have rights superior to those of our existing securityholders, which could adversely affect rights of our existing securityholders and the market price of our common stock. If we raise additional funds by issuing debt securities, the holders of those debt securities would have some rights senior to those of our existing securityholders, and the terms of these debt securities could impose restrictions on operations and create a significant interest expense for us which could have a materially adverse effect on our business.
 
Purchasers in this offering will experience immediate and substantial dilution in the book value of their investment.
 
Because the public offering price per share is substantially higher than the book value per share of our common stock, you will suffer substantial dilution in the net tangible book value of the common stock you purchase in this offering. After giving effect to the sale by us of 5,954,545 shares of our common stock at a public offering price of $1.10 per share, and after deducting the underwriting discount and estimated offering expenses payable by us, you will suffer immediate and substantial dilution of $1.03 per share in the net tangible book value of the common stock you purchase in this offering. To the extent outstanding options, warrants or other derivative securities are ultimately exercised or converted, or if we issue equity-based awards to our employees under our 1999 Plan Stock Option Plan, there will be further dilution to investors who purchase shares in this offering. In addition, if we issue additional equity securities or derivative securities, investors purchasing shares in this offering will experience additional dilution. For a further description of the dilution that you will experience immediately after this offering, see “ Dilution ” on page S-10.
  
Sales of a substantial number of shares of our common stock, or the perception that such sales may occur, may adversely impact the price of our common stock .
 
Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception that such sales may occur, may adversely impact the price of our common stock, even if there is no relationship between such sales and the performance of our business. As of April 29, 2019, we had 99,260,214 shares of common stock outstanding, as well as stock options to purchase an aggregate of 7,213,759 shares of our common stock at a weighted average exercise price of $1.35 per share, outstanding warrants to purchase up to an aggregate of 1 ,813,856 shares of our common stock at a weighted average exercise price of $0.19 per share, 32,839,731 shares of common stock issuable upon conversion of our Series A Redeemable Preferred Stock, 47,286 shares of common stock issuable upon conversion of our Series B Convertible Redeemable Preferred Stock, 10,079,452 shares of common stock issuable upon conversion of our Series C Convertible Redeemable Preferred Stock and 457,332 shares of common stock reserved for issuance under our 1999 Stock Option Plan. The exercise of such outstanding derivative securities may result in further dilution of your investment.
 
 
S-5
 
 
CAU T IONARY NOTES REGA RDING FORWARD-LOOKING STATEMENTS
 
This prospectus supplement and the accompanying prospectus contains forward-looking statements that involve substantial risks and uncertainties. All statements contained in this prospectus supplement and the accompanying prospectus other than statements of historical facts, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
 
The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about:
 
the availability of capital to satisfy our working capital requirements;
 
the accuracy of our estimates regarding expenses, future revenues and capital requirements;
 
anticipated trends and challenges in our business and the markets in which we operate;
 
our ability to anticipate market needs or develop new or enhanced products to meet those needs;
 
our expectations regarding market acceptance of our products;
 
the success of competing products by others that are or become available in the market in which we sell our products;
 
our ability to protect our confidential information and intellectual property rights;
 
our ability to manage expansion into international markets;
 
our ability to maintain or broaden our business relationships and develop new relationships with strategic alliances, suppliers, customers, distributors or otherwise;
 
developments in the U.S. and foreign countries; and
 
other risks and uncertainties, including those described under the section titled Item 1A—Risk Factors ,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, which risk factors are incorporated herein by reference.
 
These forward-looking statements are only predictions and we may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, so you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. We have included important factors in the cautionary statements included in this prospectus, as well as certain information incorporated by reference into this prospectus, that could cause actual future results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.
 
You should read this prospectus with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.
 
 
S-6
 
 
USE O F P R O CEEDS

We estimate that the net proceeds from the sale of shares of our common stock offered under this prospectus supplement will be approximately $ 6.125 million if we sell the maximum amount of common stock offered hereby, after deducting the estimated offering expenses payable by us. However, this is a best efforts offering with no minimum, and we may not sell all or any of these shares; as a result, we may receive significantly less in net proceeds.
 
We intend to use the net proceeds of this offering for working capital and other general corporate purposes, including payment to our financial advisor, Needham & Company, of $425,000 for their service as our financial advisor for the offering. We may also use a portion of the net proceeds to invest in or acquire businesses or technologies that we believe are complementary to our own, although we have no current plans, commitments or agreements with respect to any acquisitions as of the date of this prospectus supplement.
 
This expected use of our net proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including the progress of our product candidate development, the status of and results from clinical trials, as well as any collaborations that we may enter into with third parties for our product candidates, and any unforeseen cash needs.
 
As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering, and investors will be relying on the judgment of our management regarding the application of the net proceeds from this offering. The timing and amount of our actual expenditures will be based on many factors, including cash flows from operations and the anticipated growth of our business. Pending these uses, we expect to invest the net proceeds in short-term, interest bearing obligations, certificates of deposit or direct or guaranteed obligations of the United States. The goal with respect to the investment of these net proceeds is capital preservation and liquidity so that such funds are readily available to fund our operations.
 
Based on the planned use of proceeds described above, we believe that the net proceeds from this offering and our existing cash, cash equivalents and marketable securities will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2020. We have based this estimate on assumptions that may prove to be incorrect, and we could use our available capital resources sooner than we currently expect.
 
 
 
S-7
 
 
PR I CE RANGE OF OUR COMMON STOCK
 
Market Information
 
Our common stock does not trade on an established securities exchange. Our common stock is quoted under the symbol “IWSY” on the OTCQB marketplace. Any OTCQB marketplace quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions.
 
The following table sets forth the high and low sale prices for our common stock for each quarter in 2019, 2018 and 2017:
 
2019 Fiscal Quarters
 
High
 
 
Low
 
First Quarter
  $ 1.80  
  $ 0.75  
Second Quarter (through April 29, 2019)
  $ 1.60  
  $ 1.21  
 
2018 Fiscal Quarters
 
High
 
 
Low
 
First Quarter
  $ 2.24  
  $ 1.50  
Second Quarter
  $ 1.90  
  $ 1.08  
Third Quarter
  $ 1.44  
  $ 0.86  
Fourth Quarter
  $ 1.01  
  $ 0.55  
 
2017 Fiscal Quarters
 
High
 
 
Low
 
First Quarter
  $ 1.39  
  $ 0.98  
Second Quarter
  $ 1.24  
  $ 0.81  
Third Quarter
  $ 1.50  
  $ 0.83  
Fourth Quarter
  $ 1.62  
  $ 1.25  
 
Holders
 
As of April 29, 2019, we had approximately 201 registered holders of record of our common stock. A significant number of our shares of common stock were held in street name and, as such, we believe that the actual number of beneficial owners of our common stock is significantly higher.
 
 
S-8
 
 
 
DIVI D E ND POLICY
 
We have never declared or paid cash dividends on our common stock. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future. Any future determination to declare cash dividends on our common stock will be made at the discretion of our Board of Directors and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our Board of Directors may deem relevant.
 
Our Series A Convertible Preferred Stock (“ Series A Preferred ”), Series B Convertible Redeemable Stock (“ Series B Preferred ”) and our Series C Convertible Redeemable Preferred Stock (“ Series C Preferred ”) each accrue dividends that are payable on a quarterly basis. Both the Series A Preferred and the Series C Preferred accrue dividends at a rate of 8% per annum if paid in cash and 10% per annum if paid by the issuance of shares of common stock. Our Series B Preferred accrues dividends at a rate of $0.2125 per share per annum, payable in equal semiannual installments of $0.10625 per share.
 
 
 
 
 
S-9
 
 
D I L UTION
 
If you purchase shares of our common stock in this offering, you will experience dilution to the extent of the difference between the public offering price per share and our as adjusted net tangible book value per share immediately after this offering.
 
Net tangible book value is total assets minus the sum of liabilities and intangible assets. Net tangible book value per share is net tangible book value divided by the total number of shares of common stock outstanding. As of December 31, 2018, our net tangible book value was approximately $1.6 million, or approximately $0.02 per share.
 
After giving effect to our receipt of approximately $6.125 million of estimated net proceeds after deducting estimated offering expenses payable by us, from our sale of 5,954,545 shares of common stock in this offering at a public offering price of  $1.10 per share, our pro forma net tangible book value as of December 31, 2018, would have been approximately $7.8 million, or $0.07 per share. This amount represents an immediate increase in net tangible book value of  $0.05 per share of our common stock to existing stockholders and an immediate dilution in net tangible book value of  $1.03 per share of our common stock to new investors purchasing shares of common stock in this offering.
 
                 The following table illustrates this dilution on a per share basis to new investors:
 
Public offering price per share:
 
 
 
  $ 1.10
 
Net tangible book value per share as of December 31, 2018
  $ 0.02
 
       
Increase in net tangible book value per share after this offering
  $ 0.05
 
       
 
       
       
Pro forma net tangible book value per share after this offering
       
  $ 0.07
 
 
       
       
Dilution in pro forma net tangible book value per share to new investors in this offering
       
  $ 1.03  
 
The foregoing discussion and table do not take into account further dilution to new investors that could occur upon the exercise of outstanding options or warrants having a per share exercise price less than the combined public offering price in this offering. To the extent that we raise additional capital through the sale of equity or convertible debt securities after this offering, the issuance of those securities could result in further dilution to our stockholders.
 
The table and discussion above are based on 98,223,632 shares of our common stock outstanding as of December 31, 2018, and excludes as of that date the following:
 
7,227,248 shares of common stock issuable upon the exercise of stock options as of December 31, 2018 at a weighted average exercise price of $1.34 per share;

1,813,856 shares of common stock issuable upon exercise of outstanding warrants, with a weighted average exercise price of $0.19 per share; and
 
32,580,000 shares of common stock issuable upon conversion of the Company’s Series A Convertible Redeemable Preferred Stock,
 
46,029 shares of common stock issuable upon conversion of the Company’s Series B Convertible Redeemable Preferred Stock,
 
10,000,000 shares of common stock issuable upon conversion of the Company’s Series C Convertible Redeemable Preferred Stock,
 
730,677 shares of common stock reserved for future issuance under the Company’s 1999 Stock Option Plan as of December 31, 2018 .
 
 
 
S-10
 
 
P LAN OF DIST R IBUTION
 
We plan to issue and sell 5,954,545 shares of our common stock directly to participating institutional investors (the “ Investors ”), subject to certain limitations, including the number or dollar amount of shares registered under the registration statement to which the offering relates. A copy of the subscription form executed by each Investor is attached as  Appendix A  to this prospectus supplement. We expect to deliver the shares of common stock directly to the investor on or about May 1, 2019.
 
The public offering price per share of common stock in this offering is $1.10. The offering price and other terms of the shares were negotiated between us and the investor, in consultation with the financial advisor based on the trading of our common stock prior to the offering, among other things. Other factors considered in determining the public offering price of the shares of our common stock we are offering include the history and prospects of the Company, the stage of development of our business, our business plans for the future and the extent to which they have been implemented, an assessment of our management, general conditions of the securities markets at the time of the offering and such other factors as were deemed relevant.
 
We have engaged a financial advisor, Needham & Company, to assist with the coordination and closing of this offering, which will receive a set fee of $425,000 for its services.
 
 
 
 
 
 
 
S-11
 
 
LEG AL MATTERS
 
Certain legal matters in connection with this offering will be passed upon for us by Disclosure Law Group, a Professional Corporation, of San Diego, California.
 
EX P ERTS
 
Our consolidated financial statements appearing in our Annual Report on Form 10-K for the year ended December 31, 2018, and the effectiveness of our internal control over financial reporting as of December 31, 2018, have been audited by Mayer Hoffman McCann P.C.  of San Diego, California , an independent registered public accounting firm, as set forth in their reports thereon. Such consolidated financial statements are incorporated herein by reference in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.
 
  WHERE YOU CAN F I ND MORE INFORMATION
 
We are a public company and file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC’s public reference room at 100 F Street, NE, Washington, D.C. 20549. You can request copies of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the public reference room. Our SEC filings are also available, at no charge, to the public at the SEC’s web site at  http://www.sec.gov .
 
INCORPORATION OF C E RT AIN INFORMATION BY REFERENCE
 
The following documents filed by us with the SEC are incorporated by reference in this prospectus:
 
Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed on March 28, 2019;
 
Current Report on Form 8-K, filed February 1, 2019;
 
Current Report on Form 8-K, filed February 19, 2019; and
 
The description of our common stock contained in the Registration Statement on Form 8-A filed pursuant to Section 12(b) of the Exchange Act on March 21, 2000, including any amendment or report filed with the SEC for the purpose of updating this description.
 
We also incorporate by reference all documents we file pursuant to Section 13(a), 13(c), 14 or 15 of the Exchange Act (other than any portions of filings that are furnished rather than filed pursuant to Items 2.02 and 7.01 of a Current Report on Form 8-K) after the date of the initial registration statement of which this prospectus supplement and accompanying prospectus are a part and prior to effectiveness of such registration statement. All documents we file in the future pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus supplement and accompanying prospectus and prior to the termination of the offering are also incorporated by reference and are an important part of this prospectus.
 
Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purposes of this registration statement to the extent that a statement contained herein or in any other subsequently filed document which also is or deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this registration statement.
 
We will provide to each person, including any beneficial owner, to whom a prospectus is delivered, a copy of any or all of the information that has been incorporated by reference in the prospectus supplement and accompanying prospectus but not delivered with the prospectus supplement or accompanying prospectus. You may request a copy of these filings, excluding the exhibits to such filings which we have not specifically incorporated by reference in such filings, at no cost, by writing to or calling us at:
 
ImageWare Systems, Inc.
Attn: Corporate Secretary
13500 Evening Creek Drive N., Suite 550
San Diego, CA 92128
(858) 673-8600
 
This prospectus supplement and accompanying prospectus is part of a registration statement we filed with the SEC. You should only rely on the information or representations contained in this prospectus and any accompanying prospectus supplement. We have not authorized anyone to provide information other than that provided in this prospectus and any accompanying prospectus supplement. We are not making an offer of the securities in any state where the offer is not permitted. You should not assume that the information in this prospectus or any accompanying prospectus supplement is accurate as of any date other than the date on the front of the document.
 
 
 
 
 
S-12
 
 
ImageWare Systems, Inc.
 
Subscription Form
  
Subscriber’s name (the “ Subscriber ”):
_____________________________________________________
 
 
Subscriber’s address
_____________________________________________________
 
_____________________________________________________
 
 
Subscriber’s social security or federal tax identification number:
 
_____________________________________________________
 
 
Brokerage firm (for delivering shares):
_____________________________________________________
 
 
Account number at brokerage firm:
 _____________________________________________________
 
 
DTC participant number:
 _____________________________________________________
 
 
Number of shares of common stock, par value $0.001 per share (the “ Shares ”) subscribed for:
 
______________________________________________________
 
 
Amount Owed for Shares:
____________________________________ ($_____ per share)
 
Wire Information:
 
 
 
 
Date of Wire: ___________________
 
 
 
 
 
Fed Reference No.: ______________
 
Subscriber agrees and acknowledges that the Shares subscribed for shall be issued as of the date of acceptance of this Subscription Form by ImageWare Systems, Inc., and delivered to Subscriber within two (2) business days thereafter.
 
Representations, Warranties, Agreements:
 
 
1.             
By executing and returning this form, the Subscriber represents, warrants and agrees that:
 
1.1             He/she/it is the Subscriber, or has full power and authority to act on behalf of and bind the Subscriber in subscribing as set forth herein and making these representations, warranties and agreements.
 
1.2             The shares are being offered pursuant to the Shelf Registration Statement on Form S-3, filed by ImageWare Systems, Inc. (“ ImageWare ”) on June 28, 2018 and declared effective by the Securities and Exchange Commission (the “ SEC ”) on July 10, 2018 (File No. 333- 225935) (the “ Registration Statement ”) and the prospectus supplement and accompany prospectus (the “ Prospectus ”) filed with the SEC on April 29, 2019 (available at  http://iwsinc.com  under Investor Relations/ Preferred Stock Offering, or by email to  wwetherell@iwsinc.com ).
 
1.3             The Subscriber has had full opportunity to read and review the Prospectus and the documents incorporated therein by reference, and consult with an attorney regarding such Prospectus and additional documentation.
 
1.4             The information provided herein and these representations, warranties and agreements are accurate and complete, and shall remain so until the undersigned notifies ImageWare otherwise.
 
2.             
By accepting this form, ImageWare represents, warrants and agrees that:
 
2.1            ImageWare has been duly organized and is validly existing as an entity in good standing under the laws of its jurisdiction of organization. ImageWare has the full corporate power and authority to own its properties and conduct its business as currently being carried on and as described in the Prospectus.
 
2.2             Upon receipt of an executed copy of this form by the Subscriber and acceptance of the executed form by ImageWare, ImageWare agrees that it will become obligated to issue the Shares to the Subscriber, which agreement will be a valid and binding agreement by ImageWare. In addition, the Shares, when issued in the manner described in the Prospectus, will be validly issued, fully paid and nonassessable.
 
2.3             Issuance of the Shares by ImageWare to the Subscriber in the manner described in the Prospectus will not conflict with any law, organizational document, or material contract of ImageWare.
 
2.4             No stop order suspending the effectiveness of the Registration Statement or any part thereto or any post-effective amendment thereto has been issued, and no proceeding for that purpose ahs been initiated or, to ImageWare’s knowledge, initiated by the Securities and Exchange Commission.
 
A-1
 
 
Contact information, if we have any questions:
 
__________________________________
 
(Phone)
 
 
 
 
 _________________________________
(Email)
 
 Signature:
 
______________________________
 
 
By:___________________________
 
 
Date:__________________________
 
 
Agreed and accepted by ImageWare Systems, Inc.
 
 
______________________________
 
By:___________________________
 
Date:__________________________
 
 
Subscription Instructions:
 
 
1.
Wire the funds to:
 
 
Bank name
 
 
Bank address
 
 
 
ABA routing #
 
 
Swift #
 
 
 
Account name
ImageWare Systems, Inc.
 
 
Account #
 
 
 
 
2.
Execute the subscription form (being sure to include the date of the wire and the wire Fed. Ref. No.) and email the form to rcharest@disclosurelawgroup.com.
 
  

 
 
A-2
 
 

 
BASE PROSPECTUS 
 
 
$ 25,000,000
 
COMMON STOCK
PREFERRED STOCK
WARRANTS
UNITS
 
 
From time to time, we may offer and sell, in one or more offerings, up to $25,000,000 of any combination of the securities described in this prospectus. We may also offer securities as may be issuable upon conversion, repurchase, exchange or exercise of any securities registered hereunder, including any applicable anti-dilution provisions.
 
We will provide the specific price and number of securities issued in supplements to this prospectus. You should read this prospectus and the accompanying prospectus supplement carefully before you invest.
 
This prospectus provides a general description of the securities we may offer from time to time. Each time we offer securities, we will provide specific terms of the securities offered in a supplement to this prospectus. We may also authorize one or more free writing prospectuses to be provided to you in connection with an offering. The prospectus supplement and any related free writing prospectus may also add, update or change information contained in this prospectus. You should carefully read this prospectus, the applicable prospectus supplement and any related free writing prospectus, as well as any documents incorporated by reference, before you invest in any of the securities being offered.
 
Our common stock is currently listed for quotation on the OTCQB Marketplace under the symbol “IWSY.” The last reported sales price of our common stock on June 27, 2018 was $1.28 per share.
 
We may offer and sell our securities to or through one or more agents, underwriters, dealers or other third parties, or directly to one or more purchasers on a continuous or delayed basis. If agents, underwriters or dealers are used to sell our securities, we will name them and describe their compensation in a prospectus supplement. The price to the public of our securities and the net proceeds we expect to receive from the sale of such securities will also be set forth in a prospectus supplement. For additional information on the methods of sale, you should refer to the section entitled “ Plan of Distribution ” in this prospectus.
 
Our business and investing in our securities involves significant risks. You should review carefully the risks and uncertainties referenced under the heading “ Risk Factors ” on page 5 of this prospectus, as well as those contained in the applicable prospectus supplement and any related free writing prospectus, and in the other documents that are incorporated by reference into this prospectus or the applicable prospectus supplement.
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
 
 
 
The date of this prospectus is July 10, 2018
 
 
 
 
 
IMAG EWARE SYSTEMS, INC.
 
TAB L E OF CONTENTS
 
 
 
 
ABOUT THIS P R OSPECTUS
 
This prospectus is part of a registration statement filed with the Securities and Exchange Commission (the “ SEC ”), using a “shelf” registration process. Under this shelf registration process, we may sell the securities described in this prospectus in one or more offerings. This prospectus provides you with a general description of the securities which may be offered. Each time we offer securities for sale, we will provide a prospectus supplement that contains information about the specific terms of that offering. Any prospectus supplement may also add or update information contained in this prospectus. You should read both this prospectus and any prospectus supplement together with additional information described below under “ Where You Can Find More Information ” and “ Incorporation of Certain Information by Reference .”
 
You should rely only on the information contained or incorporated by reference in this prospectus, and in any prospectus supplement. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making offers to sell or solicitations to buy the securities described in this prospectus in any jurisdiction in which an offer or solicitation is not authorized, or in which the person making that offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make an offer or solicitation. You should not assume that the information in this prospectus or any prospectus supplement, as well as the information we file or previously filed with the SEC that we incorporate by reference in this prospectus or any prospectus supplement, is accurate as of any date other than its respective date. Our business, financial condition, results of operations and prospects may have changed since those dates.
 
This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under the heading “ Where You Can Find More Information.
 
  
 
 
BUSI N ESS  OVERVIEW
 
This summary highlights information contained elsewhere in this prospectus. This summary does not contain all the information you should consider before buying our securities. You should read the following summary together with the more detailed information appearing in this prospectus, including the section titled “Risk Factors” on page 5 , before deciding whether to purchase shares of our securities.
 
All brand names or trademarks appearing in this report are the property of their respective holders. Unless the context requires otherwise, references in this report to “ImageWare,” “ImageWare Systems,” the “Company,” “we,” “us,” and “our” refer to ImageWare Systems, Inc., a Delaware corporation.
 
Overview
 
We develop mobile and cloud-based identity management solutions providing biometric, secure credential and law enforcement technologies. Our patented biometric product line includes our flagship product, the IWS Biometric Engine®, a hardware and algorithm independent multi-biometric engine that enables the enrollment and management of unlimited population sizes. Our identification products are used to manage and issue secure credentials, including national IDs, passports, driver licenses and access control credentials. Our digital booking products provide law enforcement with integrated mug shots, fingerprint LiveScan and investigative capabilities. We also provide comprehensive authentication security software using biometrics to secure physical and logical access to facilities or computer networks or internet sites. We are headquartered in San Diego, California, with offices in Portland, Oregon, Mexico, and Ottawa, Ontario.
 
We are also a leading developer of mobile and cloud-based identity management solutions providing patented biometric authentication solutions for the enterprise. We deliver next-generation biometrics as an interactive and scalable cloud-based solution. We bring together cloud and mobile technology to offer multi-factor authentication for smartphone users, for the enterprise, and across industries. We have introduced a set of mobile and cloud solutions to provide biometric user authentication, including the GoVerifyID® mobile application and cloud-based SaaS solutions. These solutions include GoMobile Interactive (“ GMI ”), which provides patented, secure, dynamic messaging. More recently we have introduced GoVerifyID® Enterprise Suite, which provides turnkey integration with Microsoft Windows, Microsoft Active Directory, and security products from CA, HPE, IBM, and SAP. These solutions are marketed and sold to businesses across many industries. For the healthcare industry, we also developed and market a patented, FDA-Cleared, biometrically-secured, enterprise-level platform for patient engagement and medication adherence.
 
Historically, we have marketed our products to government entities at the federal, state and local levels; however, the emergence of cloud based computing, a mobile market that demands increased security and interoperable systems, and the proven success of our products in the government markets, has enabled us to enlarge our target market focus to include the emerging consumer and non-government enterprise marketplace.
 
Our biometric technology is a core software component of an organization’s security infrastructure and includes a multi-biometric identity management solution for enrolling, managing, identifying and verifying the identities of people by the physical characteristics of the human body. We develop, sell and support various identity management capabilities within government (federal, state and local), law enforcement, commercial enterprises, and transportation and aviation markets for identification and verification purposes. Our IWS Biometric Engine is a patented biometric identity management software platform for multi-biometric enrollment, management and authentication, managing population databases of virtually unlimited sizes. It is hardware agnostic and can utilize different types of biometric algorithms. It allows different types of biometrics to be operated at the same time on a seamlessly integrated platform. It is also offered as a Software Development Kit (“ SKD ”) based search engine, enabling developers and system integrators to implement a biometric solution or integrate biometric capabilities into existing applications without having to derive biometric functionality from pre-existing applications. The IWS Biometric Engine combined with our secure credential platform, IWS EPI Builder, provides a comprehensive, integrated biometric and secure credential solution that can be leveraged for high-end applications such as passports, driver licenses, national IDs, and other secure documents.
  
Our law enforcement solutions enable agencies to quickly capture, archive, search, retrieve, and share digital images, fingerprints and other biometrics as well as criminal history records on a stand-alone, networked, wireless or web-based platform. We develop, sell and support a suite of modular software products used by law enforcement and public safety agencies to create and manage criminal history records and to investigate crime. Our IWS Law Enforcement solution consists of five software modules: Capture and Investigative modules, which provide a criminal booking system with related databases as well as the ability to create and print mug photo/SMT image lineups and electronic mug-books; a Facial Recognition module, which uses biometric facial recognition to identify suspects; a Web module, which provides access to centrally stored records over the Internet in a connected or wireless fashion; and a LiveScan module, which incorporates LiveScan capabilities into IWS Law Enforcement providing integrated fingerprint and palm print biometric management for civil and law enforcement use. The IWS Biometric Engine is also available to our law enforcement clients and allows them to capture and search using other biometrics such as iris or DNA.
 
 
Our secure credential solutions empower customers to create secure and smart digital identification documents with complete ID systems. We develop, sell and support software and design systems which utilize digital imaging and biometrics in the production of photo identification cards, credentials and identification systems. Our products in this market consist of IWS EPI Suite and IWS EPI Builder. These products allow for production of digital identification cards and related databases and records and can be used by, among others, schools, airports, hospitals, corporations or governments. We have added the ability to incorporate multiple biometrics into the ID systems with the integration of IWS Biometric Engine to our secure credential product line.
 
Our GoVerifyID products support multi-modal biometric authentication including, but not limited to, face, voice, fingerprint, iris, palm, and more. All the biometrics can be combined with or used as replacements for authentication and access control tools, including tokens, digital certificates, passwords, and PINS, to provide the ultimate level of assurance, accountability, and ease of use for corporate networks, web applications, mobile devices, and PC desktop environments. GoVerifyID provides patented multi-modal biometric identity authentication that can be used in place of passwords or as a strong second factor authentication method. GoVerifyID is provided as a cloud-based Software-as-a-Service (“ SaaS ”) solution; thereby, eliminating complex IT deployment of biometric software and eliminating startup costs. GoVerifyID works with existing mobile devices, eliminating the need for specialized biometric scanning devices typically used with most biometric solutions.
 
GoVerifyID was built to work seamlessly with our patented technology portfolio, including GoMobile Interactive®, the secure dynamic messaging system, and the ultra-scalable IWS Biometric Engine that provides anonymous biometric matching and storage. GoVerifyID is secure, simple to use, and designed to provide instant identity authentication by engaging with the biometric capture capabilities of each user’s mobile device. GoVerifyID also provides a fully open SDK for organizations that require the utmost in flexibility.
 
Our GoVerifyID Enterprise Suite for Windows easily and seamlessly integrates with a user’s existing Microsoft ecosystem/infrastructure to support the user’s extended workforce. GoVerifyID Enterprise Suite secures corporate networks from end-to-end – both applications and data – on client, server, and cloud systems with flexible user login policies to address varied trust requirements. Our GoVerifyID Enterprise Suite works with the smart devices that the workforce already uses, including iOS/Android smartphones and tablets.
 
Our GoVerifyID Enterprise Suite for Windows provides biometric authentication for the Microsoft ecosystem that secures enterprise security without compromising agility, productivity, or user experience. Its comprehensive architecture offers biometric authentication for the complete range of enterprise stakeholders, delivering secure enterprise applications and workspaces to internal employees, partners, suppliers and vendors, even customers. Out-of-band authentication is provided via universally available devices, such as smartphones and tablets. In-band authentication can be enabled via fingerprint readers, iris scanners, and any Windows Biometric Framework compatible device. The server component provides easy centralized management of biometric authentication policies for all users, using a standard Snap-In to the Microsoft Management Console. It provides greater user assurance and Single Sign-On (“ SSO ”) convenience for all corporate systems and cloud applications. There is no compromise in agility or user experience.
 
GoVerifyID Enterprise Suite also provides options for seamless integration with leading Enterprise Identity and Access Management (“ IAM ”) solutions including CA SSO, IBM Security Access Manager (“ ISAM ”), SAP Cloud Platform, and HPE’s Aruba ClearPass. These turnkey integrations provide multi-modal biometric authentication to replace or augment passwords for use with enterprise and consumer class systems.
 
Our pillphone® Platform:
 
Improves medication adherence and manages chronic conditions by enriching the relationship between the care team and the patient via its enterprise level, mobile communication platform;
 
Digitally connects healthcare providers with patients and provides support when the patients are outside of the medical facility;
 
Streamlines workflows and improves care team communication and collaboration with the patient by offering personalized, two-way interactive, secure messaging and real-time remote medication monitoring; and
 
Enhances the human connection of the care team that is essential for quality patient-centered care.
 
 
 
Risk Factors
 
Our business is subject to substantial risk. Please carefully consider the section titled “ Risk Factors ” on page 5 of this prospectus for a discussion of the factors you should carefully consider before deciding to purchase securities that may be offered by this prospectus.
 
Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. You should be able to bear a complete loss of your investment.
 
Corporate Information
 
We were incorporated in the state of Delaware in 2005, and previously incorporated in California in 1987 as a California corporation. Our principal place of business is located at 10815 Rancho Bernardo Road, Suite 310, San Diego, California 92127. Our telephone number is (858) 673-8600. We maintain a corporate website at  http://www.iwsinc.com . The information contained on our website is not, and should not be interpreted to be, a part of this prospectus.  
 
 
 
 
 
 
 
RI S K FA CTORS
 
Investing in our securities involves a high degree of risk. Before deciding whether to purchase any of our securities, you should carefully consider the risks and uncertainties described under “ Risk Factors ” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, any subsequent Quarterly Report on Form 10-Q and our other filings with the SEC, all of which are incorporated by reference herein. If any of these risks actually occur, our business, financial condition and results of operations could be materially and adversely affected and we may not be able to achieve our goals, the value of our securities could decline and you could lose some or all of your investment. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. If any of these risks occur, the trading price of our securities could decline materially and you could lose all or part of your investment .
 
 
 
CAUTIONARY NOTES REGA R DING FORWARD-LOOKING STATEMENTS
 
This prospectus contains forward-looking statements that involve substantial risks and uncertainties. All statements contained in this prospectus other than statements of historical facts, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
 
The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about:
 
the availability of capital to satisfy our working capital requirements;
 
the accuracy of our estimates regarding expenses, future revenues and capital requirements;
 
anticipated trends and challenges in our business and the markets in which we operate;
 
our ability to anticipate market needs or develop new or enhanced products to meet those needs;
 
our expectations regarding market acceptance of our products;
 
the success of competing products by others that are or become available in the market in which we sell our products;
 
our ability to protect our confidential information and intellectual property rights;
 
our ability to manage expansion into international markets;
 
our ability to maintain or broaden our business relationships and develop new relationships with strategic alliances, suppliers, customers, distributors or otherwise;
 
developments in the U.S. and foreign countries; and
 
other risks and uncertainties, including those  described under Item 1A, “ Risk Factors ,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, which risk factors are incorporated herein by reference .
 
These forward-looking statements are only predictions and we may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, so you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. We have included important factors in the cautionary statements included in this prospectus, as well as certain information incorporated by reference into this prospectus, that could cause actual future results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.
 
You should read this prospectus with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.
 
 
USE O PROCEEDS
 
Unless we state otherwise in an accompanying prospectus supplement, we intend to use the net proceeds from the sale of the securities offered by us under this prospectus and any related prospectus supplement for general corporate purposes including, but not limited to, capital expenditures, repayment of indebtedness, and additions to working capital. We cannot currently allocate specific percentages of the net proceeds that we may use for the purposes specified above. When a particular series of securities is offered, the prospectus supplement relating to that series will set forth our intended use for the net proceeds we receive from the sale of those securities. Pending the application of the net proceeds, we intend to invest the net proceeds in short- and intermediate-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government.
 
 
 
DESCRIPTION OF SECUR I TIES THAT MAY BE OFFERED
 
General
 
Our certificate of incorporation, as amended (our “ Charter ”), authorizes the issuance of up to 175,000,000 shares of our common stock, $0.01 par value per share, and 4,000,000 shares of preferred stock, $0.01 par value per share.
 
As of June 27, 2018 we had 95,180,459   shares of common stock issued and outstanding. Our authorized but unissued shares of common stock are available for issuance without action by our stockholders. All shares of common stock now outstanding are fully paid and non-assessable. In addition, our Board of Directors has designated two series of preferred stock, Series A Convertible Preferred (“ Series A Preferred ”) and Series B Convertible Redeemable Stock (“ Series B Preferred ”). As of June 27, 2018, there were 31,021 designated shares of Series A Preferred, 30,571 of which are issued and outstanding, and 750,000 shares designated as Series B Preferred, of which 239,400 shares are issued and outstanding.
 
We may elect or be required to amend our Charter to increase the number of shares of common stock authorized for issuance prior to completing sales of shares of our common stock, or securities convertible and/or exchangeable into shares of our common stock described in this prospectus.
 
Transfer Agent
 
The transfer agent and registrar for our common stock is Computershare Trust Company, N.A. The transfer agent and registrar’s address is 250 Royall Street, Canton, Massachusetts 02021.
 
Common Stock
 
This section describes the general terms of our common stock that we may offer from time to time. For more detailed information, a holder of our common stock should refer to our Charter and our bylaws, copies of which are filed with the SEC as exhibits to the registration statement of which this prospectus is a part.
 
Except as otherwise expressly provided in our Charter, or as required by applicable law, all shares of our common stock have the same rights and privileges and rank equally, share ratably and are identical in all respects as to all matters, including, without limitation, those described below. All outstanding shares of common stock are fully paid and nonassessable.
 
The holders of our common stock have equal ratable rights to dividends from funds legally available, when, as and if declared by our Board of Directors. To date, we have not paid any dividends on our common stock. Holders of common stock are also entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of the affairs. The holders of our common stock have no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to our common stock.
 
Each holder of common stock is entitled to one vote for each share of common stock held on all matters submitted to a vote of the stockholders, including the election of directors. The holders of shares of common stock do not have cumulative voting rights, which means that the holders of more than 50% of such outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose and in such event, the holders of the remaining shares will not be able to elect any of our directors. The holders of 50% percent of the outstanding common stock constitute a quorum at any meeting of shareholders, and the vote by the holders of a majority of the outstanding shares are required to effect certain fundamental corporate changes, such as liquidation, merger or amendment of our Charter.
  
Preferred Stock
 
This section describes the general terms and provisions of our outstanding shares of preferred stock, as well as preferred stock that we may offer from time to time. The applicable prospectus supplement will describe the specific terms of the shares of preferred stock offered through that prospectus supplement, which may differ from the terms we describe below. We will file a copy of the certificate of designation that contains the terms of each new series of preferred stock with the SEC each time we issue a new series of preferred stock, and these certificates of designation will be incorporated by reference into the registration statement of which this prospectus is a part. Each certificate of designation will establish the number of shares included in a designated series and fix the designation, powers, privileges, preferences and rights of the shares of each series as well as any applicable qualifications, limitations or restrictions. A holder of our preferred stock should refer to the applicable certificate of designation, our Charter and the applicable prospectus supplement (and any related free writing prospectus that we may authorize to be provided to you) for more specific information.
 
 
Our Board of Directors has the authority, without action by our stockholders to designate and issue preferred stock in one or more series and to designate the rights, preferences and privileges of each series, which may be greater than the rights of our common stock. It is not possible to state the actual effect of the issuance of any shares of our preferred stock upon the rights of holders of our common stock until our Board of Directors determines the specific rights of the holders of our preferred stock. However, the effects might include, among other things:
 
restricting dividends on our common stock;
 
diluting the voting power of our common stock;
 
impairing the liquidation rights of our common stock; or
 
delaying or preventing a change in control of our Company without further action by our stockholders.
 
Series A Preferred
 
On September 15, 2017, our Board designated 31,021 shares of our authorized but unissued shares of preferred stock as Series A Preferred. S hares of Series A Preferred accrue dividends at a rate of 8% per annum if paid in cash, and 10% per annum if paid by the issuance of shares of our common stock. Each share of Series A Preferred has a liquidation preference of $1,000 per share and is convertible, at the option of the holder, into that number of shares of the Company’s common stock equal to the Liquidation Preference, divided by $1.15. Each holder of the Series A Preferred is entitled to vote on all matters, together with the holders of our common stock, on an as converted basis.
 
The holders of Series A Preferred may elect to convert shares of Series A Preferred into shares of our common stock (“ Conversion Shares ”) at any time. In the event the volume-weighted average price (“ VWAP ”) of the our common stock is at least $2.15 per share for at least 20 consecutive trading days, we may elect to convert one-half of the shares of Series A Preferred issued and outstanding, on a pro-rata basis, into Conversion Shares, or, if the VWAP of our Common Stock is at least $2.15 for 80 consecutive trading days, we may convert all issued and outstanding shares of Series A Preferred into Conversion Shares. In addition, in the event of a Change of Control, we will have the option to redeem all issued and outstanding shares of Series A Preferred for 115% of the Liquidation Preference per share.
 
The Company had 30,571 shares of Series A Preferred outstanding as of June 27, 2018 and cumulative undeclared dividends of approximately $720,000. 
 
Series B Preferred
 
In April 1995, our Charter was amended to designate 750,000 shares of Series B Preferred stock for issuance. Every 5.275 shares of Series B Preferred is convertible into one share of our common stock.
 
The holders of Series B Preferred are entitled to cumulative preferred dividends payable at the rate of $0.2125 per share, per annum, subject to legally available funds. Shares of Series B Preferred and accrued but unpaid dividends are convertible at the option of the holder into shares of common stock at a conversion price equal to the original Series B Preferred issue price, as adjusted to prevent dilution.
 
The holders of Series B Preferred, on an as-converted basis, have the same voting rights per share as common stock; provided, however, that the holders of Series B Preferred have a special right to elect one director if the Company defaults in the payment of any dividend to the holders of Series B Preferred. The holders of Series B Preferred are entitled to initial distributions of $2.50 per share of Series B Preferred outstanding, upon liquidation and in preference to common shares and any other series of preferred stock plus all accrued but unpaid dividends.
 
The Company presently has the right to redeem all or some of the outstanding shares of Series B Preferred at a price equal to the original issue price, plus all accrued but unpaid dividends.
 
The Company had 239,400 shares of Series B Preferred outstanding as of June 27, 2018, and cumulative undeclared dividends of approximately $8,000.
 
 
 
Warrants
 
The following description, together with the additional information we include in any applicable prospectus supplements or free writing prospectus, summarizes the material terms and provisions of the warrants that we may offer under this prospectus. Warrants may be offered independently or together with common stock or preferred stock offered by any prospectus supplement or free writing prospectus, and may be attached to or separate from those securities. While the terms we have summarized below will generally apply to any future warrants we may offer under this prospectus, we will describe the particular terms of any warrants that we may offer in more detail in the applicable prospectus supplement or free writing prospectus. The terms of any warrants we offer under a prospectus supplement or free writing prospectus may differ from the terms we describe below.
 
In the event that we issue warrants, we will issue the warrants under a warrant agreement, which we will enter into with a warrant agent to be selected by us. Forms of these warrant agreements and forms of the warrant certificates representing the warrants, and the complete warrant agreements and forms of warrant certificates containing the terms of the warrants being offered, will be filed as exhibits to the registration statement of which this prospectus is a part or will be incorporated by reference from reports that we file with the SEC. We use the term “warrant agreement” to refer to any of these warrant agreements. We use the term “warrant agent” to refer to the warrant agent under any of these warrant agreements. The warrant agent will act solely as an agent of ours in connection with the warrants and will not act as an agent for the holders or beneficial owners of the warrants.
 
The following summaries of material provisions of the warrants and the warrant agreements are subject to, and qualified in their entirety by reference to, all the provisions of the warrant agreement applicable to a particular series of warrants. We urge you to read the applicable prospectus supplements or free writing prospectus related to the warrants that we sell under this prospectus, as well as the complete warrant agreements that contain the terms of the warrants.
 
General
 
We will describe in the applicable prospectus supplement or free writing prospectus the terms relating to a series of warrants. If warrants for the purchase of common stock or preferred stock are offered, the prospectus supplement or free writing prospectus will describe the following terms, to the extent applicable:
 
the offering price and the aggregate number of warrants offered;
 
the total number of shares that can be purchased if a holder of the warrants exercises them and, in the case of warrants for preferred stock, the designation, total number and terms of the series of preferred stock that can be purchased upon exercise;
 
the designation and terms of any series of preferred stock with which the warrants are being offered and the number of warrants being offered with each share of common stock or preferred stock;
 
the date on and after which the holder of the warrants can transfer them separately from the related common stock;
 
the number of shares of common stock or preferred stock that can be purchased if a holder exercises the warrant and the price at which such common stock or preferred stock may be purchased upon exercise, including, if applicable, any provisions for changes to or adjustments in the exercise price and in the securities or other property receivable upon exercise;
 
the terms of any rights to redeem or call, or accelerate the expiration of, the warrants;
 
the date on which the right to exercise the warrants begins and the date on which that right expires;
 
federal income tax consequences of holding or exercising the warrants; and
 
any other specific terms, preferences, rights or limitations of, or restrictions on, the warrants.
 
 
Exercise of Warrants
 
Each holder of a warrant is entitled to purchase the number of shares of common stock or preferred stock, as the case may be, at the exercise price described in the applicable prospectus supplement or free writing prospectus. After the close of business on the day when the right to exercise terminates (or a later date if we extend the time for exercise), unexercised warrants will become void.
 
A holder of warrants may exercise them by following the general procedure outlined below:
 
delivering to the warrant agent the payment required by the applicable prospectus supplement or free writing prospectus to purchase the underlying security;
 
properly completing and signing the reverse side of the warrant certificate representing the warrants; and
 
delivering the warrant certificate representing the warrants to the warrant agent within five business days of the warrant agent receiving payment of the exercise price.
    
If you comply with the procedures described above, your warrants will be considered to have been exercised when the warrant agent receives payment of the exercise price, subject to the transfer books for the securities issuable upon exercise of the warrant not being closed on such date. After you have completed those procedures and subject to the foregoing, we will, as soon as practicable, issue and deliver to you the common stock or preferred stock that you purchased upon exercise. If you exercise fewer than all of the warrants represented by a warrant certificate, a new warrant certificate will be issued to you for the unexercised amount of warrants. Holders of warrants will be required to pay any tax or governmental charge that may be imposed in connection with transferring the underlying securities in connection with the exercise of the warrants.
 
Amendments and Supplements to the Warrant Agreements
 
We may amend or supplement a warrant agreement without the consent of the holders of the applicable warrants to cure ambiguities in the warrant agreement, to cure or correct a defective provision in the warrant agreement, or to provide for other matters under the warrant agreement that we and the warrant agent deem necessary or desirable, so long as, in each case, such amendments or supplements do not materially adversely affect the interests of the holders of the warrants.
 
Warrant Adjustments
 
Unless the applicable prospectus supplement or free writing prospectus states otherwise, the exercise price of, and the number of securities covered by, a common stock warrant or a preferred stock warrant will be adjusted proportionately if we subdivide or combine our common stock or preferred stock, as applicable. In addition, unless the prospectus supplement or free writing prospectus states otherwise, if we, without receiving payment:
 
issue capital stock or other securities convertible into or exchangeable for common stock or preferred stock, or any rights to subscribe for, purchase or otherwise acquire any of the foregoing, as a dividend or distribution to holders of our common stock or preferred stock;
 
pay any cash to holders of our common stock or preferred stock other than a cash dividend paid out of our current or retained earnings or other than in accordance with the terms of the preferred stock;
 
issue any evidence of our indebtedness or rights to subscribe for or purchase our indebtedness to holders of our common stock or preferred stock; or
 
issue common stock or preferred stock or additional stock or other securities or property to holders of our common stock or preferred stock by way of spinoff, split-up, reclassification, combination of shares or similar corporate rearrangement,
 
then the holders of common stock warrants and preferred stock warrants, as applicable, will be entitled to receive upon exercise of the warrants, in addition to the securities otherwise receivable upon exercise of the warrants and without paying any additional consideration, the amount of stock and other securities and property such holders would have been entitled to receive had they held the common stock or preferred stock, as applicable, issuable under the warrants on the dates on which holders of those securities received or became entitled to receive such additional stock and other securities and property.
 
 
Except as stated above or as otherwise set forth in the applicable prospectus supplement or free writing prospectus, the exercise price and number of securities covered by a common stock warrant and preferred stock warrant, and the amounts of other securities or property to be received, if any, upon exercise of such warrants, will not be adjusted or provided for if we issue those securities or any securities convertible into or exchangeable for those securities, or securities carrying the right to purchase those securities or securities convertible into or exchangeable for those securities.
 
Holders of common stock warrants and preferred stock warrants may have additional rights under the following circumstances:
 
certain reclassifications, capital reorganizations or changes of the common stock or preferred stock, as applicable;
 
certain share exchanges, mergers, or similar transactions involving us and which result in changes of the common stock or preferred stock, as applicable; or
 
certain sales or dispositions to another entity of all or substantially all of our property and assets.
 
If one of the above transactions occurs and holders of our common stock or preferred stock are entitled to receive stock, securities or other property with respect to or in exchange for their securities, the holders of the common stock warrants and preferred stock warrants then outstanding, as applicable, will be entitled to receive upon exercise of their warrants the kind and amount of shares of stock and other securities or property that they would have received upon the applicable transaction if they had exercised their warrants immediately before the transaction.
 
Units
 
This section outlines some of the provisions of the units and the unit agreements. This information may not be complete in all respects and is qualified entirely by reference to the unit agreement with respect to the units of any particular series. The specific terms of any series of units will be described in the applicable prospectus supplement or free writing prospectus. If so described in a particular prospectus supplement or free writing prospectus, the specific terms of any series of units may differ from the general description of terms presented below.
 
As specified in the applicable prospectus supplement, we may issue units consisting of one or more shares of common stock, shares of preferred stock, warrants or any combination of such securities.
 
The applicable prospectus supplement will specify the following terms of any units in respect of which this prospectus is being delivered:
 
the terms of the units and of any of the shares of common stock, shares of preferred stock, or warrants comprising the units, including whether and under what circumstances the securities comprising the units may be traded separately;
 
a description of the terms of any unit agreement governing the units;
 
if appropriate, a discussion of material U.S. federal income tax considerations; and
 
a description of the provisions for the payment, settlement, transfer or exchange of the units.
 
 
 
DESCRIPTION OF CERT AIN PROVISIONS OF DELAWARE LAW AND
OUR CHARTER AND BYLAWS
 
Certain provisions of Delaware law, our Charter and bylaws discussed below may have the effect of making more difficult or discouraging a tender offer, proxy contest or other takeover attempt. These provisions are expected to encourage persons seeking to acquire control of our company to first negotiate with our Board of Directors. We believe that the benefits of increasing our ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure our company outweigh the disadvantages of discouraging these proposals because negotiation of these proposals could result in an improvement of their terms.
 
Delaware Anti-Takeover Law.  
 
We are subject to Section 203 of the Delaware General Corporation Law. Section 203 generally prohibits a public Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless:
 
prior to the date of the transaction, the Board of Directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
 
upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding specified shares; or
 
at or subsequent to the date of the transaction, the business combination is approved by the Board of Directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder.
 
Section 203 defines a “business combination” to include:
 
any merger or consolidation involving the corporation and the interested stockholder;
 
any sale, lease, exchange, mortgage, pledge, transfer or other disposition of 10% or more of the assets of the corporation to or with the interested stockholder;
 
subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;
 
subject to exceptions, any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or
 
the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.
 
In general, Section 203 defines an “interested stockholder” as any person that is:
 
the owner of 15% or more of the outstanding voting stock of the corporation;
 
an affiliate or associate of the corporation who was the owner of 15% or more of the outstanding voting stock of the corporation at any time within three years immediately prior to the relevant date; or
 
the affiliates and associates of the above.
 
Under specific circumstances, Section 203 makes it more difficult for an “interested stockholder” to effect various business combinations with a corporation for a three-year period, although the stockholders may, by adopting an amendment to the corporation’s certificate of incorporation or bylaws, elect not to be governed by this section, effective 12 months after adoption.
 
Our Charter and bylaws do not exclude us from the restrictions of Section 203. We anticipate that the provisions of Section 203 might encourage companies interested in acquiring us to negotiate in advance with our Board of Directors since the stockholder approval requirement would be avoided if a majority of the directors then in office approve either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder.
 
 
Charter and Bylaws.
 
Provisions of our Charter and bylaws may delay or discourage transactions involving an actual or potential change of control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect the price of our common stock. Among other things, our Charter and bylaws:
 
permit our Board of Directors to issue up to 4,000,000 shares of preferred stock, with any rights, preferences and privileges as they may designate (including the right to approve an acquisition or other change of control);
 
provide that the authorized number of directors may be changed only by the vote of a majority of the Company’s shareholders at a properly convened annual meeting, or by the written consent of a majority of the Company’s shareholders, or by the Board of Directors;
 
provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum;
 
provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide advance notice in writing, and also specify requirements as to the form and content of a stockholder’s notice; and
 
do not provide for cumulative voting rights (therefore allowing the holders of a majority of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose).
 
 
 
PLAN O F DISTRIBUTION
 
We may sell the securities described in this prospectus to or through underwriters or dealers, through agents, or directly to one or more purchasers. A prospectus supplement or supplements (and any related free writing prospectus that we may authorize to be provided to you) will describe the terms of the offering of the securities, including, to the extent applicable:
 
the name or names of any underwriters, dealers or agents, if applicable;
 
the purchase price of the securities and the proceeds we will receive from the sale;
 
any over-allotment options under which underwriters may purchase additional securities from us;
 
any agency fees or underwriting discounts and other items constituting agents’ or underwriters’ compensation;
 
any public offering price;
 
any discounts or concessions allowed or re-allowed or paid to dealers; and
 
any securities exchange or market on which the securities offered in the prospectus supplement may be listed.
 
Only those underwriters identified in such prospectus supplement are deemed to be underwriters in connection with the securities offered by the prospectus supplement.
  
If underwriters are used in the sale, they will acquire the securities for their own account and may resell the securities from time to time in one or more transactions at a fixed public offering price or at varying prices determined at the time of sale. The obligations of the underwriters to purchase the securities will be subject to the conditions set forth in the applicable underwriting agreement. We may offer the securities to the public through underwriting syndicates represented by managing underwriters or by underwriters without a syndicate. Subject to certain conditions, the underwriters will be obligated to purchase all of the securities offered by the prospectus supplement. Any public offering price and any discounts or concessions allowed or reallowed or paid to dealers may change from time to time. We may use underwriters with whom we have a material relationship. We will describe in the prospectus supplement that names the underwriter, the nature of any such relationship.
 
We may sell securities directly or through agents we designate from time to time. We will name any agent involved in the offering and sale of securities, and we will describe any commissions we will pay the agent in the prospectus supplement. Unless the prospectus supplement states otherwise, our agent will act on a best-efforts basis for the period of its appointment.
 
We may authorize agents or underwriters to solicit offers by certain types of institutional investors to purchase securities from us at the public offering price set forth in the prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. We will describe the conditions to these contracts and the commissions we must pay for solicitation of these contracts in the prospectus supplement.
 
We may provide agents and underwriters with indemnification against civil liabilities related to this offering, including liabilities under the Securities Act of 1933, as amended, or contribution with respect to payments that the agents or underwriters may make with respect to these liabilities. Agents and underwriters may engage in transactions with, or perform services for, us in the ordinary course of business.
  
Any underwriters or agents that are qualified market makers on the OTCQB Marketplace may engage in passive market making transactions in the securities on the OTCQB Marketplace in accordance with Regulation M under the Exchange Act, during the business day prior to the pricing of the offering, before the commencement of offers or sales of the securities. Passive market makers must comply with applicable volume and price limitations and must be identified as passive market makers. In general, a passive market maker must display its bid at a price not in excess of the highest independent bid for such security; if all independent bids are lowered below the passive market maker’s bid, however, the passive market maker’s bid must then be lowered when certain purchase limits are exceeded. Passive market making may stabilize the market price of the securities at a level above that which might otherwise prevail in the open market and, if commenced, may be discontinued at any time.
 
In compliance with guidelines of the Financial Industry Regulatory Authority, Inc. (“ FINRA ”), the maximum consideration or discount to be received by any FINRA member or independent broker dealer may not exceed 8% of the aggregate amount of the securities offered pursuant to this prospectus and any applicable prospectus supplement. 
 
 
 
 
LEG A L MATTERS
 
Certain legal matters in connection with this offering will be passed upon for us by Disclosure Law Group, a Professional Corporation, of San Diego, California.
 
EX P ERTS
 
Our consolidated financial statements appearing in our Annual Report on Form 10-K for the year ended December 31, 2017, and the effectiveness of our internal control over financial reporting as of December 31, 2017, have been audited by Mayer Hoffman McCann P.C.  of San Diego, California , an independent registered public accounting firm, as set forth in their reports thereon. Such consolidated financial statements are incorporated herein by reference in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.
 
WHERE YOU CAN FI N D MORE  INFORMATION
 
We are a public company and file annual, quarterly and special reports, proxy statements and other information with the SEC . You may read and copy any document we file at the SEC’s public reference room at 100 F Street, NE, Washington, D.C. 20549. You can request copies of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the public reference room. Our SEC filings are also available, at no charge, to the public at the SEC’s web site at  http://www.sec.gov .
 
INCORPORATION OF  CERT A IN INFORMATION BY REFERENCE
 
The following documents filed by us with the SEC are incorporated by reference in this prospectus:
 
Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed on March 19, 2018;
 
Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 filed on May 10, 2018;
 
Current Report on Form 8-K, filed February 13, 2018; and
 
The description of our common stock contained in the Registration Statement on Form 8-A filed pursuant to Section 12(b) of the Exchange Act on March 21, 2000, including any amendment or report filed with the SEC for the purpose of updating this description.
 
We also incorporate by reference all documents we file pursuant to Section 13(a), 13(c), 14 or 15 of the Exchange Act (other than any portions of filings that are furnished rather than filed pursuant to Items 2.02 and 7.01 of a Current Report on Form 8-K) after the date of the initial registration statement of which this prospectus is a part and prior to effectiveness of such registration statement. All documents we file in the future pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus and prior to the termination of the offering are also incorporated by reference and are an important part of this prospectus.
 
Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purposes of this registration statement to the extent that a statement contained herein or in any other subsequently filed document which also is or deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this registration statement.
 
We will provide to each person, including any beneficial owner, to whom a prospectus is delivered, a copy of any or all of the information that has been incorporated by reference in the prospectus but not delivered with the prospectus. You may request a copy of these filings, excluding the exhibits to such filings which we have not specifically incorporated by reference in such filings, at no cost, by writing to or calling us at:
 
ImageWare Systems, Inc.
Attn: Corporate Secretary
10815 Rancho Bernardo Road, Suite 310
San Diego, California 92127
(858) 673-8600
 
This prospectus is part of a registration statement we filed with the SEC. You should only rely on the information or representations contained in this prospectus and any accompanying prospectus supplement. We have not authorized anyone to provide information other than that provided in this prospectus and any accompanying prospectus supplement. We are not making an offer of the securities in any state where the offer is not permitted. You should not assume that the information in this prospectus or any accompanying prospectus supplement is accurate as of any date other than the date on the front of the document.
 
 
 
-16-

 
 
 

 
5,954,545 Shares of Common Stock
 
 
 
 
 
   
_______________________________
 
Prospectus Supplement
_______________________________
 
 
 
Needham & Company
 
 
 
 
 
April 29, 2019
 
 
 
 

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